Thousands of pensioners waiting to find out whether they paid too much tax have received a fresh update from HM Revenue and Customs (HMRC). The department has confirmed it is continuing work to fix a long-running State Pension tax error that affected some tax calculations, while also outlining its plans to identify those impacted and correct future records.
Although HMRC says many people will not have overpaid tax because of the issue, some pensioners could still be due refunds depending on their individual circumstances.
Error
The issue dates back to changes made to HMRC’s Pay As You Earn (PAYE) system in 2010.
HMRC previously confirmed that incorrect State Pension figures were used when calculating some taxpayers’ liabilities. The error affected several types of tax calculations, including:
| Tax Calculation | Impact |
|---|---|
| PAYE end-of-year reconciliations | Incorrect State Pension figures used |
| Self Assessment returns | Some calculations affected |
| Simple Assessment calculations | Potential tax errors identified |
The problem may have resulted in some pensioners paying more tax than they should have.
Update
In a letter to the Chair of the Public Accounts Committee, HMRC Permanent Secretary John-Paul Marks acknowledged the issue and apologised to those affected.
He explained that not every incorrect calculation resulted in an overpayment of tax, but recognised that any loss matters, particularly for pensioners living on fixed incomes.
HMRC also confirmed it is working to introduce a permanent solution that will prevent the problem from happening again.
Changes
The department plans to ensure future tax calculations use the correct State Pension figures.
It also intends to correct affected PAYE, Self Assessment, and Simple Assessment records during the 2025-26 tax year.
However, HMRC has not yet announced when all corrections will be completed or when any refunds will begin to be issued.
Refunds
At present, there is no online tool or automatic method for pensioners to check whether they were affected by the error.
HMRC says it is still identifying everyone impacted before providing further information about how refunds will be processed.
While the department expects many overpayments to be relatively small, some pensioners could be entitled to larger repayments based on their individual tax records.
Checks
For now, HMRC says most pensioners do not need to contact the department.
If you are concerned, you can review your latest tax calculation and compare the State Pension income recorded by HMRC with the amount you actually received.
| What to Check | Why It Matters |
|---|---|
| State Pension shown on your tax calculation | Confirms HMRC used the correct amount |
| Amount of State Pension received | Helps identify possible discrepancies |
| Recent tax notices | May highlight calculation differences |
If the figures appear to be incorrect, you can contact HMRC to request an explanation. However, the department says it is still finalising how it will identify affected taxpayers and issue any refunds.
Outlook
HMRC has apologised for the State Pension tax error and says resolving the issue remains a priority. Although many pensioners may not have experienced any financial loss, others could be due tax refunds once the department completes its review. Until HMRC announces the next stage of the process, affected individuals are encouraged to review their tax records and wait for further guidance on eligibility and repayments.
FAQs
What caused the State Pension tax error?
Incorrect pension figures were used in some tax calculations.
Will everyone receive a tax refund?
No, not every error resulted in overpaid tax.
Should I contact HMRC now?
Most pensioners do not need to contact HMRC yet.
Can I check if I was affected?
Compare your State Pension with your tax records.
